Transformers & Rectifiers (India) Limited

Transcription

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2 Fourteenth Annual Report Transformers & Rectifiers (India) Limited Board of Directors Mr. Jitendra Mamtora Mr. Satyen Mamtora Mr. Bhaskar Sen Mrs. Karuna Mamtora Mr. Michael Homawalla Mr. Rajendra Shah Mr. Harish Rangwala Mr. Sureshchandra Agarwal Chairman & Managing Director Joint Managing Director Joint Managing Director Executive Director Director Director Director Director Company Secretary Mr. Tushar Shah Audit Committee Shareholders / Investors Grievance Committee Mr. Michael Homawalla Chairman Mr. Rajendra Shah Chairman Mr. Jitendra Mamtora Member Mr. Bhaskar Sen Member Mr. Harish Rangwala Member Mr. Satyen Mamtora Member Remuneration Committee Registrar and Share Transfer Agent Mr. Sureshchandra Agarwal Chairman Intime Spectrum Registry Limited Mr. Michael Homawalla Member C-13, Pannalal Silk Mills Compound, Mr. Harish Rangwala Member LBS Road, Bhandup (West), Mumbai , India. Bankers State Bank of India Bank of Baroda Axis Bank Auditors C. C.Chokshi & Co. Chartered Accountants, Heritage, Nr. Gujarat Vidhyapith, Ahmedabad Registered Office Survey No , Opp. P.W.D. Stores, Sarkhej Bavla Highway, Village : Changodar, Taluka : Sanand, District : Ahmedabad Plants 1. Survey No , Opp. P.W.D. Stores, Sarkhej-Bavla Highway, Village: Changodar, Taluka: Sanand, Ahmedabad. 2. Plot No.233, GVMSAV Ltd., Odhav, Ahmedabad 3. Survey No.427/3/p & 431/1/p, Village Moraiya, Ahmedabad (Under Construction) Contents Notice Director s Report Corporate Governance Management Discussion and Analysis Report Auditor s Report Standalone Financial Statement Financial Details of Subsidiary Companies Statement pursuant to Section 212 of the Companies Act, Consolidated Financial Statement... 57

3 TRANSFORMERS & RECTIFIERS (INDIA) LIMITED VISION To consolidate our National and International presence as a leading manufacturer of Power, Furnace and Rectifier Transformers and maintain an average annual growth rate of 50% MISSION To emerge as a preferred solution provider for quality Transformers with a team of dedicated professionals and business associates who are ethical, value driven and create excellent customer relationships. 2

4 Fourteenth Annual Report Notice is hereby given that the Fourteenth Annual General Meeting of the members of Transformers & Rectifiers (India) Limited will be held on Thursday, 26 th June, 2008 at a.m. at the Survey No , Opp. PWD Stores, Sarkhej-Bavla Highway, Village: Changodar, Taluka Sanand, Ahmedabad , Gujarat, to transact the following business : ORDINARY BUSINESS 1. To receive, consider and adopt the Audited Balance Sheet as at 31 st March, 2008 and Profit & Loss Account for the year ended on that date and the Reports of the Board of Directors and Auditors thereon. 2. To declare a dividend on equity shares. 3. To appoint a director in place of Mr. Harish Rangwala, who retires by rotation and, being eligible, offers himself for re-appointment. 4. To appoint a director in place of Mr. Michael Homawalla, who retires by rotation and, being eligible, offers himself for re-appointment. 5. To appoint auditors to hold office from the conclusion of this meeting until the conclusion of next Annual General Meeting and to fix their remuneration. SPECIAL BUSINESS NOTICE 6. To consider and if thought fit, to pass with or without modification the following resolution as an Ordinary Resolution RESOLVED THAT in accordance with provisions of Sections 198, 269, 309, 310 and other applicable provisions, if any, of the Companies Act, 1956 (including any statutory modification or re-enactment thereof for the time being in force), read with Schedule XIII thereof, consent of the Company be and is hereby accorded to the revision in terms of remuneration payable to Mr. Jitendra Mamtora, Chairman and Managing Director of the Company, with effect from 1 st April, 2008, as set out in the Explanatory Statement annexed hereto, for the remaining period of his tenure. RESOLVED FURTHER THAT Mr. Jitendra Mamtora, will be entitled to receive salary of Rs Lacs per month, instead of earlier Rs.5.00 Lacs per month, w.e.f. 1 st April, 2008, with no change in other remuneration terms, as approved by the members in general meeting held on 11 th June, RESOLVED FURTHER THAT, Board of Directors be and are hereby authorised to take such steps as may be necessary to give effect to this resolution. By Order of the Board of Directors Place : Ahmedabad Date : 22 nd April, 2008 Tushar Shah Company Secretary Registered Office : Survey No.: , Opp. P.W.D. Stores, Sarkhej Bavla Highway, Village: Changodar, Taluka: Sanand, District: Ahmedabad Notes : An Explanatory Statement pursuant to Section173(2) of the Companies Act, 1956 relating to the Special Business to be transacted at the meeting is annexed hereto. A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote instead of himself and such proxy need not be a member of the Company. Proxies in order to be effective must reach the registered office of the Company not less than 48 hours before the scheduled commencement of the meeting. Profile of the Directors being reappointed as required under clause 49 of the listing agreement are attached in annexure to this notice. Register of members and Share Transfer Books of the Company will be remain closed from Saturday, 21 st June, 2008 to Thursday, 26 th June, 2008 (both days inclusive), for the purpose of dividend, if declared at the annual general meeting. 3

5 TRANSFORMERS & RECTIFIERS (INDIA) LIMITED The dividend on shares as recommended by the Board of Directors, if declared at the meeting, will be paid: > in respect of shares held in demat form, on the basis of beneficial ownership as per details furnished by the depositories, as at the end of the business on Friday, 20 th June, 2008 and > in respect of shares held in physical form to those members whose names appear on the Registers of Members of the Company after giving effect to all valid share transfer lodged with the share transfer agent on or before Friday, 20 th June, In case of any change of particulars including address, bank mandate and nomination for shares held in demat form, should be notified only to the respective Depository Participants where the member has opened his/her demat account. The Company or its Share Transfer Agent will not act on any direct request from these members for change of such details. However requests for any change in particulars in respect of shares held in physical form should be sent to the Registrars & Share Transfer Agents of the Company. Members holding shares in demat form may please note that the bank account details given by them to their Depositary Participants (DPs) and on to the Company by such DPs would be printed on the dividend warrants of the concerned members. However, if any member(s) wants to receive dividend in any other bank account details with his/her concerned DP, the Company will not be able to act on any such request from shareholders directly for deletion /change in the bank account details. Members may please note that the dividend warrants are payable at par at the designated branches of the Bank printed on the reverse of the dividend warrant for an initial period of three months only. Thereafter, the dividend warrant on revalidation is payable only at limited centres/ branches of the said bank. The member are therefore, advised to encash dividend warrants within the initial validity period. Members who wish to attend the meeting are requested to bring attendance slip sent herewith, duly filled in, and the copy of the annual report. Copies of the annual report will not be distributed at the meeting. By Order of the Board of Directors Place : Ahmedabad Date : 22 nd April, 2008 Tushar Shah Company Secretary Registered Office : Survey No : , Opp. P.W.D. Stores, Sarkhej Bavla Highway, Village: Changodar, Taluka: Sanand, District: Ahmedabad Item No.6 Explanatory Statement [Pursuant to Section 173(2) of the Companies] Mr. Jitendra Mamtora, Chairman and Managing Director, is looking after and managing day to day affairs of the Company. The Board of Directors at their meeting held on 22 nd April, 2008 had approved the revision in the remuneration payable to Mr. Jitendra Mamtora, Chairman and Managing Director of the Company, with effect from 1st April, 2008, till his appointment period. The revision in remuneration package of Mr. Jitendra Mamtora, Chairman and Managing Director was reviewed and recommended by Remuneration Committee keeping in mind his contribution made to the growth and development of the Company, as well as the compensation package prevalent in the Industry. He will be entitled to receive salary of Rs Lacs per month, instead of earlier Rs.5.00 Lacs per month, w.e.f. 1 st April, 2008, with no change in other remuneration terms, as approved by the members in general meeting held on 11 th June, The Board recommends the resolution for the approval of shareholders. Except Mr. Jitendra Mamtora, himself and Mr. Satyen Mamtora and Mrs. Karuna Mamtora, relative of him, none of the other Directors are interested or concerned in this resolution. 4

6 Fourteenth Annual Report Information of Directors who are proposed to be re-appointed as per clause Mr. Michael Homawalla Brief Resume and his Expertise Mr. Michael B. Homawalla, 49 years, is a Non-Executive and Independent Director of our Company. He holds a Bachelor s degree in Commerce from Gujarat University and a Masters in Business Administration from the University of East Georgia, U.S.A. He has over 35 years of experience inter-alia in human resource management. He started his career as an executive with the Consulate of the United States Government in Mumbai. From July 1983 to August 1992, he worked as Head of Human Resource at Himalaya Machinery and has thereafter been associated with various organizations in different capacities including with Atco Group as Vice President, Whole Time Director of Atco Products Limited, and Vice President Human Resources at the Samsong Group. Since 2000 he has been working with the Rubamin Group as Vice President HR. Chairman/Membership of the Committees of the Board of the other Company(ies), on which he is a Director. Date of Appointment No. of Shares held in the Company List of other Directorship* 1. Transpares Limited 2. Transweld Mechanical Engineering Works Ltd. Nil 6 th September, 2005 Nil 2. Mr. Harish Rangwala Brief Resume and his Expertise Mr. Harish R. Rangwala, 59 years, is a Non-Executive and Independent Director of our Company. He holds a Bachelors degree in Mechanical Engineering from LE Engineering College, Morbi. He worked with Tata Chemicals, Mithapur as a Shop Engineer for six years. Subsequently in 1972 he set up Harsha Engineers Limited, for the manufacture of small tools and engineering components. Mr. Rangwala is also the president of the Lenco Alumini Association. Chairman/Membership of the Committees of the Board of the other Company(ies), on which he is a Director. Date of Appointment No. of Shares held in the Company List of other Directorship* 1. Harsha Engineers Limited Nil 25 th August, ,000 * Including Private Companies 5

7 TRANSFORMERS & RECTIFIERS (INDIA) LIMITED Dear Members, DIRECTORS REPORT Your Directors have pleasure in presenting the 14 th Annual Report on the business and operations together with the Audited accounts for year ended 31 st March, The performance of the Company for the year ended on March 31, 2008 is summarized below. Financial Results Standalone Consolidated Dividend Your Directors recommend a dividend of 20% i.e. Rs.2.00 per Equity Share of Rs. 10/- each for the year (Previous Year 18% i.e. Rs per Share), subject to approval of shareholders at the 14 th Annual General Meeting. Review of Operations For the year ended 31 st March, 2008, your Company has reported consolidated Net Sales including Service Income and net profit after minority interest and taxation of Rs. 30, lacs and Rs. 3, lacs respectively. As compared to previous year figures Net Sales including Service Income is higher by 40% and net profit after taxation and minority interest is up by 97%. On standalone basis, the Company has reported a 38% increase in its Net Sales including Service Income to Rs. 30, lacs. The net profit after taxation grew by 99% to Rs 3, lacs. Public Issue and Utilization of Issue Proceeds In order to set up of green-field manufacturing facility at Moraiya, near Ahmedabad for manufacturing of 220 kv Class & above transformers and to part finance incremental working capital requirements, during December, 2007, the Company has made an Initial Public Offer (IPO) of 29,95,000 Equity Shares of Rs.10/- each at a price of Rs.465/- per share aggregating to Rs. 13,927 lacs through 100% book building procedure. The IPO of the Company had received overwhelming response from the public and issue was oversubscribed by times. The shares were listed for trading on the Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India Limited (NSE) w.e.f. 28 th December, The details of utilization of said funds upto 31 st March, 2008 are as under: Net Sales including Service Income 30, , , , Other Income Total Income 30, , , , EBIDTA , , , Interest & Finance charges Depreciation & Amortization Profit before tax 5, , , , Taxation 1, , , Net Profit after tax 3, , , , Minority Interest Net Profit after tax and minority interest 3, , , , Appropriations: Proposed Dividend Tax on Dividend Interim Dividend Paid Tax on dividend paid Transferred to general reserve Balance carried to Balance Sheet 2, , , ,343.21

8 Fourteenth Annual Report Particulars Projections Actual Setting up of green-field manufacturing 6,668 2,068 facility at Moraiya, near Ahmedabad, Gujarat for manufacturing transformers; Towards working capital requirement 3,540 1,443 Repayment of high cost debts 2,764 2,450 Issue Expenses Total 13,927 6,427 Balance Unutilized 7,500 Balance Unutilized amount has been temporarily invested in debt mutual funds. Current Status of the Project: Your Company is setting up expansion project to manufacture transformers of 220 kv Class and above at Moraiya, Dist. Ahmedabad. The civil construction work is nearing to completion. The orders for major machineries have already been placed and their delivery has started as per the schedule. The commercial production is likely to start in second quarter of FY With this plant becoming fully operational, your Company will achieve sustained growth in the coming years. Depository System Your Company s shares are tradable compulsorily in electronic form. The Company is having connectivity with both the depositories viz. National Securities Depository Limited (NSDL) and Central Depository Services (India) Ltd. (CDSL). Intime Spectrum Registry Ltd. is the Registrar and Share Transfer Agent for the Company. The Members are requested to avail of its services as and when required. Consolidated Accounts In compliance with clause 32 and clause 50 of the Listing Agreement with the Stock Exchange and as amended pursuant to the directives of Securities and Exchange Board of India (SEBI), the Company has prepared Consolidated Financial Statements as per the Accounting Standards on Consolidated Financial Statements (AS 21) issued by the Institute of Chartered Accountants of India. The Audited Consolidated Financial Statements along with the Auditor s Report have been annexed with this Annual Report. Plans and Prospects Your Directors have a great sense of excitement at the unprecedented opportunities unfolding in the power sector. The runway seems to have been well laid for take off. Many of the high profile Government initiatives, contrary to those of the earlier years, have not flattered to deceive. The power sector made significant progress in 2007 with all its segments registering substantial growth. The capacity addition of 9050 MW was the highest ever achieved in a year. The award of three ultra mega power projects (UMPPS) totalling 12,000 MW, holds the promise of still higher capacity addition by the private sector in the coming years. The Eleventh Plan ( ) envisages a huge capacity addition of 78,577 MW. Concomitant with the generation plan, a detailed National Transmission Plan to evacuate the entire power from the proposed projects has been prepared. Against the above backdrop, your Company is broadening the canvas of its product offerings, It has already a wide range of products such as Power Transformers upto 220 kv Class, Distribution Transformers, Rectifier Transformers, Furnace Transformers upto 63 MVA. Your Company is now putting facilities for manufacturing higher ratings of 245 kv transformers and 400 kv transformers. The manufacturing and testing facilities can take up 765 kv transformers in future years. The shift of 245 kv manufacturing from existing Changodar unit to the new manufacturing site will allow your Company to take and to execute a larger share of 132 kv class and special types such as Furnace and Rectifier Transformers, thereby propelling volume growth in Sales. This is particularly relevant against the trend of growth in the 245 kv market segments, which, during first six months of FY 07-08, has grown 61% in MVA terms over Further, due to creation of Transmission Super Highways, lot of emphasis has been put on 400 kv transmission, which in turn, will enhance the demand of 400 kv transformers. Added to these, there has been excellent growth in exports and further demand is being created through Renovation & Modernisation (R & M) Programmes. On the whole, the business environment looks encouraging, the demand for transformers and other equipments continue to be robust. The industry has been growing aggressively and is projected to sustain the trend. Your Directors are confident of maintaining a steady and sustained growth in the coming years. However, with almost all manufacturers enhancing their capacities, market will be fiercely competitive; thereby margins are expected to be under some pressure. Order Book As on 31 st March, 2008, the Company s Order Book stood at Rs.33,975 lacs. The Power and Distribution transformers accounted for around 80% of the order book. Furnace and Rectifier transformer (special industrial transformers) accounted for around 14% of the order book and balance 6% of the order book was for exports. Bonus Shares During September, 2007, the Company has issued bonus share to its existing shareholders in proportion of 2:5 (i.e. Two bonus Equity Shares for every Five Equity Shares held) by capitalizing its Share Premium Account. As a result, the paid up Equity Share Capital has increased 7

9 TRANSFORMERS & RECTIFIERS (INDIA) LIMITED from Rs Lacs (70,91,865 Equity Shares of Rs. 10/- each) to Rs Lacs (99,28,611 Equity Shares of Rs. 10/- each). During the year the Company has made an Initial Public Offering (IPO) of 29,95,000 Equity Shares of Rs. 10/- each at a premium of Rs. 455/- per share. As a result Company s paid-up equity share capital has increased from Rs Lacs to Rs. 1, Lacs. Fixed Deposit The Company has neither accepted nor invited any deposit from public, within the meaning of Section 58A of the Companies Act, 1956 and Rules made there under. Formation & Re-Constitution of various Committees During the year, the Board has formed Management Committee on 23 rd August, 2007, which comprises of Mr. Jitendra Mamtora as Chairman, Mr. Satyen Mamtora, Mrs. Karuna Mamtora and Mr. Bhaskar Sen, Executive Directors of the Company, to look into and to execute routine management, administrative and operational functions. The Board has formed Transfer Committee on 24 th December, 2007 which comprises of Mr. Jitendra Mamtora as Chairman, Mr. Satyen Mamtora and Mrs. Karuna Mamtora, Executive Directors of the Company to look into transfer/demat/ remat related activities. During the year, the Management Committee met two times on and while Transfer Committee met one time on The Board of Directors has also formed Shareholders /Investors Grievance Committee, Remuneration Committee and Reconstituted Audit Committee and Revised terms of reference of the Audit Committee on 17 th September, Particulars of the various Committees are described in Corporate Governance forming part of this Annual Report. Directors Mr. Bhaskar Sen was appointed as additional director designated as Joint Managing Director w.e.f. 9 th July, 2007 and Mr. Sureshchandra Agarwal was appointed as additional director of the Company w.e.f. 13 th August, Both the Directors were regularized on 13 th September, Mr. Tushar Shah, (a qualified member of the Institute of Company Secretaries of India) was appointed as Company Secretary w.e.f. 26 th May, Mr. Harish Rangwala and Mr. Michael Homawalla, Directors of the Company who retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment, in accordance with the provisions of the Articles of Association of the Company. Details of the Directors seeking re-appointment as required under Clause 49(IV) of the Listing Agreements entered into with the Stock Exchanges are provided in the Notice forming part of this Annual Report. None of the Directors of the Company is disqualified for being appointed as Director as specified in Section 274(1)(g) of the Companies Act, Directors Responsibility Statement Pursuant to the requirements of Section 217(2AA) of the Companies Act, 1956, it is hereby confirmed: (a) (b) (c) (d) that in preparation of annual accounts for the year ended March 31, 2008, the applicable accounting standards have been followed and that no material departures have been made from the same; that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that year; that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; that the Directors have prepared the annual accounts for the year ended March 31, 2008 on going concern basis. Corporate Governance As per clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on Corporate Governance as well as Management Discussion and Analysis confirming compliance, is annexed forming part of this Annual Report. A Certificate from Mr. Tapan Shah, Practicing Company Secretary regarding compliance with corporate governance norms as stipulated in clause 49 of the Listing Agreement, is annexed to the report on Corporate Governance. Subsidiary Companies The Company has two subsidiaries namely Transweld Mechanical Engineering Works Limited (wholly owned subsidiary) and Transpares Limited (51% holding). A statement pursuant 212 of the Companies Act, 1956 relating to subsidiary companies is attached to the Accounts. In terms of approval granted by the Central Government under section 212(8) of the Companies Act, 1956 copy of Balance Sheet, Profit and Loss account, Report of the Board of Directors and Auditors of our subsidiaries have not been attached with the Balance Sheet of the Company. These documents will be made available upon request by any member of the Company interested in obtaining the 8

10 Fourteenth Annual Report same. However as directed by Central Government, the financial data of the subsidiaries have been furnished under Financial Details of Subsidiary Companies forming part of the Annual Report. Further, pursuant to accounting standard AS-21 issued by the Institute of Chartered Accountants of India, Consolidated Financial Statements presented by the Company includes financial information of its subsidiaries. These documents will also be available for inspection during business hours at our registered office in Ahmedabad. Auditors & Auditors Report M/s. C. C. Chokshi & Co., Chartered Accountants, Ahmedabad, the Statutory Auditors of the Company, retire at ensuing Annual General Meeting and have confirmed their eligibility and willingness to accept the office, if appointed. They have issued a certificate stating their appointment, if made, would be within the prescribed limit under Section 224 (1B) of the Companies Act, The Auditor s Report is self explanatory and do not call for further explanations and may be treated as adequate compliance of Section 217(3) of the Companies Act, Personnel In accordance with the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, the particulars of Employees of the Company are furnished in an Annexure forming part of this Report. Corporate Social Responsibility The Company is contributing to sustainable development by its economic activities combined with the fulfillment of its social responsibilities relating to the health, safety and environment aspects. Acknowledgement Your Directors place on record their appreciation for the overwhelming co-operation and assistance received from investors, customers, business associates, bankers, vendors, as well as regulatory and government authorities. Your Directors also acknowledge the hard work and persuasive efforts put in by the conscientious employees of the Company in carrying forward the Company s vision and mission. The enthusiasm and continuous efforts of the employees have enabled the Company to achieve rapid growth. Place : Ahmedabad Date : 22 nd April, 2008 For and on behalf of the Board of Directors Jitendra U. Mamtora Chairman & Managing Director Particulars required to be furnished by the Companies (Disclosure of particulars in the report of the Board of Directors) Rule, 1988 The particulars as prescribed under Section 217 (1)(e) of the Companies Act, 1956 read with Companies (Disclosures of the Particulars in Report of the Board of Directors) Rules, 1988 are set out in Annexure to this Report. 9

11 TRANSFORMERS & RECTIFIERS (INDIA) LIMITED ANNEXURE TO THE DIRECTORS REPORT Information as per Section 217(1)(e) read with Company s (Disclosures of particulars in the report of Board of Directors) Rules, 1988 and forming part of the Directors report for the year ended on 31 st March, Conservation of Energy : a. Energy conservation measures taken: The Company has carries out an ongoing study to identify and implement energy saving system to reduce energy consumption and cost of production. All new Equipment & Machinery is installed based upon optimum utilization of energy. b. Additional investment and proposals, if any being implemented for reduction of energy consumption: Nil. Impact of measure at (a) & (b) above for reduction of energy consumption and consequent impact on the production of goods: Nil. Details of total & per unit consumption of energy are as follows : Particulars Total Consumption 17,58,655 Units 12,10,866 Units Total Cost Rs Rs Cost per Unit Rs / Unit Rs / Unit 2. Technology Absorption : The Company has not taken any technology in particular or entered into any technology agreement during the period hence the information required as per Form B is not applicable to the Company. 3. Foreign Exchange Earnings & Outgo : Particulars Earnings 1, Outgo : Foreign Travel Expenses Imports ,

12 Fourteenth Annual Report Information as per Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 and forming part of Directors Report for the year ended on 31 st March Sr. Name Age (yrs.) Qualification Date of Designation / Experience in Gross Last Employment Share Commencement Nature of Duties years Remuneration held with Holding of Employment Designation % (A) Employed throughout the year and was in receipt of remuneration which in the aggregate was not less than Rs. 24,00,000/- p.a. 1. Mr. Jitendra U. Mamtora 62 B.E Chairman & Running (Electrical) Managing Director proprietary business 2. Mr. Satyen J Mamtora 33 Diploma in Joint Managing Director N.A Electrical Engineering (B) Employed for a part of the year and was in receipt of remuneration which in the aggregate was not less than Rs. 2,00,000/- p.m. Not Applicable Note: 1. Gross Remuneration includes Salary, House Rent Allowance, Commission, Performance Incentive, contribution to provident fund and superannuation fund but excludes Gratuity. 2. Both the employees are relative of Mrs. Karuna Mamtora, Executive Director of the Company. 3. All employments are contractual only. For and on behalf of the Board of Directors Place : Ahmedabad Date : 22 nd April, 2008 Jitendra U. Mamtora Chairman & Managing Director 11

13 TRANSFORMERS & RECTIFIERS (INDIA) LIMITED The Securities and Exchange Board of India (SEBI) has stipulated Corporate Governance Standards for listed companies vide Clause 49 of the Listing Agreement with Stock Exchanges. Corporate Governance is a corporate discipline extended to transparency, integrity and accountability towards all stakeholders. Corporate Governance helps to achieve excellence to enhance stakeholders value by focusing on long-term value creation without compromising on integrity, social obligations and regulatory compliances. 1. Company s Philosophy on Corporate Governance The Company s continued endeavor is to achieve good governance, by way of a conscious and conscientious efforts whereby ensuring the truth, transparency, accountability and responsibility in all our dealings with our employees, shareholders, consumers and the community at large. The Board of Directors represents the interest of the Company s stakeholders, for optimizing long-term value by way of providing necessary guidance and strategic vision to the Company. The Board also ensures that the Company s management and employees operate with the highest degree of ethical standards. Your Company believes that the constant efforts to improve operational performance, guided by our values, form the basis for good Corporate Governance. Corporate Governance is strongly driven by our values such as quality, commitment, customer orientation and integrity. 2. Board of Directors CORPORATE GOVERNANCE A. Composition Your Company s Board consists of eight (8) Directors of which four (4) are Non-Executive and Independent and four (4) are Executive and Non-Independent Directors. The Chairman of the Board is Executive Director. The day-to day management of the Company is conducted by the Management Committee, which consist of four (4) Executive Directors subject to supervision and control of the Board of Directors. B. Board and Committees The Board Meetings are held at least once in every quarter. The Board Meetings are generally held at registered office of the Company. The Company Secretary cum Compliance officer prepares the agenda and the documents to be covered in the meeting and sends it to the Directors. The Board reviews the documents and gives its valuable suggestions during the meeting, which are discussed at length. 12

14 Fourteenth Annual Report Present Composition of the Board of Directors is as under. Name of Directors Designation Category No. of outside Outside Committees** Directorship held* Member Chairman Mr. Jitendra Mamtora Chairman & Executive Director & Managing Director Non-Independent Director (Promotor Director) Mrs. Karuna Mamtora Executive Director Executive Director & Non-Independent Director (Promotor Director) Mr. Satyen Mamtora Joint Managing Director Executive Director & Non-Independent Director (Promotor Director) Mr. Bhaskar Sen@ Joint Managing Director Executive Director & Non-Independent Director Mr. Rajendra Shah Director Non-Executive Director & Independent Director 3-2 Mr. Harish Rangwala Director Non-Executive Director & Independent Director Mr. Michael Homawalla Director Non-Executive Director & Independent Director Mr. Sureshchandra Agarwal # Director Non-Executive Director & Independent Director * Including Private Companies, ** Committees include Audit Committee & Shareholders Grievance Committee for the purpose of Clause Appointed w.e.f. July 9, 2007, # Appointed w.e.f August 13, 2007 None of the Directors of Board is a member of more than ten (10) Committees and no Director is Chairman of more than five (5) Committees across all the Companies in which they are Director. The necessary annual disclosures regarding Committee positions have been made by all the Directors. C. Board Meetings The Board normally meets once in a quarter. Additional meetings are held as and when required. During the year under review, Board met Nineteen (19) times, viz., on , , , , , , , , , , , , , , , , , and The gap between any two meetings did not exceed four months. The agenda papers along with notes and other supporting were circulated in advance of the Board Meeting with sufficient information as required under Clause 49 of the Listing Agreement. D. Director s Attendance Record in Board Meetings & Annual General Meeting Name of Directors Number of Number of Attendance Board meetings held Board meetings attended at Last AGM Mr. Jitendra Mamtora Yes Mrs. Karuna Mamtora Yes Mr. Satyen Mamtora Yes Mr. Bhaskar NA Mr. Rajendra Shah 19 8 No Mr. Harish Rangwala 19 8 No Mr. Michael Homawalla Yes Mr. Sureshchandra Agarwal # 19 6 Appointed w.e.f. July 9, 2007, # Appointed w.e.f August 13,

15 TRANSFORMERS & RECTIFIERS (INDIA) LIMITED E. Code of Conduct The Board has laid down the Code of Conduct for all Board Members and Senior Managerial Personnel of the Company. The Code of Conduct is available on the website of the Company at Annual Affirmation of compliance with the Code has been made by all Board Members and Senior Managerial Personnel of the Company. A declaration to this effect duly signed by CEO of the Company is attached herewith and forms part of Corporate Governance. F. Insider Trading Policy The Company has formulated and implemented Code of Conduct for Prevention of Insider Trading (Insider Trading Code) to comply with Insider Trading Regulation issued by SEBI. The Board has appointed Mr. Tushar Shah, Company Secretary as Compliance Officer under the Insider Trading Code for complying with the procedure, monitoring adherence to the Rules for preservation of price sensitive informations, pre clearance etc. under the overall supervision of Board. The Company follows policy on disclosure as well. The Company s Insider Trading Code is available on the Company s Website. 3. Audit Committee A. Composition Sr. Name of Members Designation Category / Status No. of Meetings No. held / attended 1 Mr. Michael Homawalla Chairman Non-Executive Director & Independent Director 6 / 5 2 Mr. Jitendra Mamtora Member Executive Director & Non-Independent Director 6 / 6 3 Mr. Harish Rangwala Member Non-Executive Director & Independent Director 6 / 4 The Audit Committee met six (6) times during the year viz, on , , , , and The Chairman of the Committee, Mr. Michael Homawalla is B.Com from Gujarat University and MBA from University of East Georgia, U.S.A., possess knowledge of Corporate Finance, Accounts, Costing and Company Law. The Statutory Auditors and Internal Auditors attend the meetings by invitation. The Company Secretary acts as the Secretary to the Committee. The Chairman of the Committee has attended the last AGM held on 11 th June, B. Terms of Reference The terms of reference as laid down by the Board include the following : Overseeing our Company s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible. Recommending to the Board, the appointment, re-appointment and, if required, the replacement or removal of the statutory auditor and the fixation of audit fees. Approval of payment to statutory auditors for any other services rendered by the statutory auditors. Appointment, removal and terms of remuneration of internal auditors Reviewing, with the management, the annual financial statements before submission to the Board for approval, with particular reference to: 1. Matters required to be included in the Director s Responsibility Statement to be included in the Board s report in terms of clause (2AA) of Section 217 of the Companies Act, 1956; 2. Changes, if any, in accounting policies and practices and reasons for the same; 3. Major accounting entries involving estimates based on the exercise of judgment by management; 4. Significant adjustments made in the financial statements arising out of audit findings; 5. Compliance with listing and other legal requirements relating to the financial statements; 6. Disclosure of any related party transactions; 7. Qualifications in the draft audit report. Reviewing, with the Management, the quarterly financial statements before submission to the Board for approval. Monitoring the use of the proceeds of the proposed initial public offering of our Company. Reviewing, with the management, performance of statutory and internal auditors, and adequacy of the internal control systems. 14

16 Fourteenth Annual Report Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure, coverage and frequency of internal audit. Discussions with internal auditors on any significant findings and follow up thereon. Reviewing internal audit reports and adequacy of the internal control systems. Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit. Reviewing management letters / letters of internal control weaknesses issued by the statutory auditors Discussion with internal auditors any significant findings and follow up there on. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of nonpayment of declared dividends) and creditors. To review the functioning of the whistle blower mechanism, when the same is adopted by our Company and is existing. Carrying out any other function as may be statutorily required to be carried out by the Audit Committee. The Audit Committee has reviewed the Management Discussion and Analysis of financial condition and results of operations forming part of this Annual Report and other information as mentioned in Clause 49 (II) (E) of the Listing Agreement. 4. Subsidiary Companies Mr. Michael Homawalla, Non-Executive and Independent Director of the Company is also Director on the Board of Transweld Mechanical Engineering Works Ltd. (100% Subsidiary) and Transpares Ltd. (51% Subsidiary). Both the Companies are non-listed and non-material Indian subsidiaries as per the Clause 49 (III) (i) of the Listing Agreement Audit Committee of the Company reviews the financial statements of Subsidiaries of the Company and Minutes of the Board Meeting along with significant transactions and arrangement of the Subsidiaries were also placed before the Board Meeting of the Company. 5. Remuneration Committee A. Composition During the year, the Remuneration Committee was formed on September 17, 2007 which comprises of three (3) Non-Executive - Independent Directors. Sr. No. Name of Members Designation Category / Status 1 Mr. Sureshchandra Agarwal Chairman Non-Executive Director & Independent Director 2 Mr. Michael Homawalla Member Non-Executive Director & Independent Director 3 Mr. Harish Rangwala Member Non-Executive Director & Independent Director There was no remuneration committee meeting held during the year ended 31st March, B. Terms of Reference To recommend to the Board, the remuneration packages of our Company s Managing/Joint Managing/ Deputy Managing/Whole-time/ Executive Directors, including all elements of remuneration package (i.e. salary, benefits, bonuses, perquisites, commission, incentives, stock options, pension, retirement benefits, details of fixed component and performance linked incentives along with the performance criteria, service contracts, notice period, severance fees etc.); To be authorised at its duly constituted meeting to determine on behalf of the Board of Directors and on behalf of the shareholders with agreed terms of reference, our Company s policy on specific remuneration packages for Company s Managing/Joint Managing/Deputy Managing/Whole-time/Executive Directors, including pension rights and any compensation payment; To implement, supervise and administer any share or stock option scheme of our Company. 15

17 TRANSFORMERS & RECTIFIERS (INDIA) LIMITED C. Remuneration of Directors The aggregate value of salary, perquisites, commission paid for the year ended 31 st March, 2008 to the Executive Directors are as follows : Name of Directors Fixed Salary Performance Total Salary Perquisites Retirement Total fixed Incentive Commission Compensation Benefits* Mr. Jitendra Mamtora Mrs. Karuna Mamtora Mr. Satyen Mamtora Mr. Bhaskar Total Appointed w.e.f. July 9, 2007, * not included in computation of celling on remuneration. Company shall contribute towards Provident Funds/ Superannuation Fund/ Annuity Fund provided that such contributions either singly or put together shall not exceed the tax free limit prescribed under the Income Tax Act. Company shall pay Gratuity at the rate not exceeding half month s salary for each completed year of service. Leave on full pay and allowances, as per rules of our Company, but not more than one month s leave for every eleven months of service. However, the leave accumulated but not availed of will be allowed to be encashed at the end of the term as per Company rules. D. Details of Non-Executive Directors Non-Executive Directors have no transaction with the Company, except receiving sitting fees for attending Board Meetings, Audit Committee Meetings, Shareholders /Investors Grievance Committee Meetings and Remuneration Committee Meetings and repayment of loans (event took place before listing). The sitting fess paid for the year ended 31 st March, 2008 were as follows : Name of Non-Executive Directors Board Audit Shareholder Remuneration Total Sitting Meeting Committee Grievance Committee Fees Paid Meeting Committee Meeting (Rs.) Meeting Mr. Rajendra Shah 40,000-5,000-45,000 Mr. Harish Rangwala 40,000 22, ,500 Mr. Michael Homawalla 40,000 22, ,500 Mr. Sureshchandra Agarwal # 40, Total 160,000 45,000 5, ,000 # Appointed w.e.f August 13, 2007 E. Details of Board of Directors The details of all Directors and Shares held by them as on 31 st March, 2008 are as under : Sr. Name of Directors Age Designation Date of Nature of No. of % held No. (yrs) Appointment Employment Shares held 1 Mr. Jitendra Mamtora 62 Chairman & Managing Director Since Incorporation Contractual 88,58, Mrs. Karuna Mamtora 58 Executive Director Since Incorporation Contractual 2,67, Mr. Satyen Mamtora 33 Joint Managing Director Since Incorporation Contractual 97, Mr. Bhaskar Sen@ 67 Joint Managing Director July 9, 2007 Contractual Mr. Rajendra Shah 60 Director August 25, , Mr. Harish Rangwala 60 Director August 25, , Mr. Michael Homawalla 49 Director September 6, Mr. Sureshchandra Agarwal# 58 Director August 13, Appointed w.e.f. July 9, 2007, # Appointed w.e.f August 13, 2007 There is no pecuniary relationship or transaction of the Company with any of the Non-Executive Directors, except sitting fees and repayment of loans (event took place before listing). The Company does not pay any severance fee and no stock option is available to the directors. 16

18 Fourteenth Annual Report F. Management Discussion and Analysis The Management Discussion and Analysis Report forms part of the Annual Report and includes discusion on various matters specified under clause 49 (IV) (F) of the Listing Agreement. 6. Shareholders /Investors Grievance Committee The Shareholders /Investors Grievance Committee comprises of Executive and Non-Executive Directors to specifically look into shareholders complaints, if any and to redress the same expeditiously, like transfer of shares, non receipt of declared dividend, revalidation of refund order, dividend warrant, etc. A. Composition Sr. Name of Members Designation Category/Status No. of meetings No. held / attended 1. Mr. Rajendra Shah Chairman Non-Executive & Independent 1/1 2. Mr. Bhaskar Sen Member Executive & Non-Independent 1/0 3. Mr. Satyen Mamtora Member Executive & Non-Independent 1/1 The Shareholders /Investors Grievance Committee met 1 times during the year viz on 24 th January, B. Details of Compliance Officer Mr. Tushar Shah, Company Secretary is the Compliance Officer and can be contacted at Survey No , Opp. PWD Stores, Sarkhej- Bavla Highway, Village: Changodar, Taluka: Sanand, Ahmedabad Gujarat. Tel.: Fax: ipo@transformerindia.com C. Terms of Reference The terms of reference of the Shareholders /Investors Grievances Committee is set out below: i. Redressal of shareholder and investor complaints like transfer of shares, non-receipt of balance sheet, non-receipt of declared dividends etc; ii. Review of cases for refusal of transfer/transmission of shares and debentures; iii. Reference to statutory and regulatory authorities regarding investor grievances; iv. And to otherwise ensure proper and timely attendance and Redressal of investor queries and grievances. D. Details of Complaints The Status of complaints received, resolved and pending during the financial year ended 31 st March, 2008 is as follows: Sr. Nature of Complaints Received Replied/ Pending No. 1 Complaints from Investors/Shareholders through correspondence/ Resolved Non Receipt of R.O./Non credit of Shares/Demat/Remat of shares 1,408 1, Complaints for Mutilated/Cheque/Refund Order Correction Complaints from NSE Complaints from BSE Complaints from SEBI Total 1,972 1, There were no pending transfers of equity shares/complaints remained pending/unattended for more than one month as on March 31, The equity shares of the Company are compulsorily traded in electronic form on the stock exchanges and hence the handling of physical transfer of shares is minimal. The Board has delegated the said powers for approving transfer and transmission of shares and issue of duplicate shares to Share Transfer Committee. The status of transfer, duplicate etc., is periodically reviewed by the Committee. The Committee oversees performance of the Registrar and Share Transfer Agents of the Company, and also recommends measures for overall improvement in the quality of investor s services. Other details for shareholders have been provided separately in General Information for Shareholders of Corporate Governance. 17

19 TRANSFORMERS & RECTIFIERS (INDIA) LIMITED E. CEO/CFO Certification This information is covered elsewhere in this Annual Report. 7. Information about General Body Meetings A. Annual General Meetings The Location, date and time of last three Annual General Meetings held are as under : Financial Year Date Time No. of special Location of Meetings resolutions passed a.m. - Survey No , Opp. PWD Stores, Sarkhej-Bavla Highway, Changodar, Sanand, Ahmedabad a.m. 2 Survey No , Opp. PWD Stores, Sarkhej-Bavla Highway, Changodar, Sanand, Ahmedabad a.m. - Survey No , Opp. PWD Stores, Sarkhej-Bavla Highway, Changodar, Sanand, Ahmedabad B. Special Resolution Particulars of Special Resolution passed are as follows: Financial Year Date Particulars To Increase the Authorised Share Capital from Rs.8,00,00,000/- (Rupees Eight Crores) to Rs.15,00,00,000/- (Rupees Fifteen Crores) 2. To Issue further Equity Shares under section 81(1A) C. Postal Ballot The Company has not passed any resolution through postal ballot during the years under reference. None of the resolutions proposed for the ensuing Annual General Meeting need to be passed through Postal Ballot. 8. Disclosures A. Related Party Transactions The Company has entered into related party transaction as a setout in the Notes to Accounts, which are not likely to conflict with the interest of the Company. The details of all significant transactions with related parties are placed before the audit committee on quarterly basis. B. Disclosure of Accounting Treatment in preparation of Financial Statement Company has followed the guidelines of accounting standards laid down by the Institute of Chartered Accountants of India (ICAI) in preparation of its financial statements. C. Details of Non-compliance by the Company Company has complied with all the requirements of regulatory authorities. No penalty/strictures were imposed on the Company by Stock Exchanges or SEBI or any statutory authority on any matter related to capital market since the date of listing of Equity Shares i.e. on 28 th December, D. Risk Management The Company has framed a formal Risk Management Framework for risk assessment and minimization. Further, the Company is in the process of up-grading their risk management framework. The Scope of the Audit Committee includes review of Company s financial and risk management policies periodically. E. Proceeds from Public Issue The Company has raised Rs. 13,927 Lacs through Issue of equity shares on IPO. The details of utilization of said funds have been provided in the notes to the Account. 18